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FIRST QUARTER RESULTS January – March 2020

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FIRST QUARTER RESULTS January – March 2020 FIRST QUARTER RESULTS January – March 2020 CONTENTS: 1. Highlights 2. Backlog 3. Consolidated Income Statement 4. Consolidated Balance Sheet Appendix: Alternative Performance Metrics First Quarter Results January – March 2020 1. MAIN HIGHLIGHTS ▪ Backlog of €10.9 billion ▪ Q1 2020 Order intake of €1.9 billion ▪ Sales at €1,181 million ▪ Operating profit (EBIT) at €23.7 million, with a 2.0% EBIT margin ▪ Net profit at €8.7 million ▪ Net cash position of €419 million Backlog at the end of March stood at €10.9 billion. In Q1 2020, the main award added to the backlog was the important refining project for Sonatrach at Haoud el-Hamra, Hassi Messaoud (Algeria), with a value of $2 billion for Técnicas Reunidas. Total sales reached €1,181 million in Q1 2020, growing 29% versus Q1 2019. Sales in the last month of the quarter were slightly affected by Covid-19 disruptions. Q1 2020 EBIT was €23.7 million, that compares to the Q1 2019 EBIT of €10.6 million, with an increase of 124% year on year. Growth in operating profit was favoured by the contribution of newer projects with healthier margins and despite the slowdown of project execution due to Covid in the last month of the quarter. Net profit in Q1 2020 reached €8.7 million, a 134% higher than in the same period of last year. Net cash position at the end of March stood at €419 million. The healthy cash position reflects the maintenance of a good progress in working capital, with no cash downpayments being received in the quarter. Outlook and Guidance for 2020 At present, it is very difficult to accurately assess the concrete dimension of the Covid- 19 impacts. As a consequence, we have decided to temporarily suspend our quantitative guidance for the year 2020 until the level of uncertainty diminishes. Nonetheless, we still feel highly confident in the good evolution of sales and margins throughout 2020, as we are executing a strong backlog, and margins are further supported by optimisation and efficiency measures and the progression of newer projects. The company will restate a quantitative guidance for 2020 in future quarterly result presentations, as soon as there is sufficient stability in the economic environment. 2 First Quarter Results January – March 2020 Juan Lladó, Técnicas Reunidas Chief Executive Officer, commented: “We are living unprecedented times, which are a real test to all of us. I am highly satisfied with how Técnicas Reunidas has been able to respond to this challenge. Once secured the safety of our employees, clients and suppliers, we have swiftly moved to put all our technological and human capacities to work to ensure business continuity and deliver the best solutions for our customers. I think we have done a good job in all those fronts. We have immediately adapted to smart work by ramping up all our digital and communication processes, already achieving high productivity levels in engineering. We are also thankful to our clients for the results achieved: their strong management capacities and their trust in TR are being key in efficiently adapting project execution to the new environment. It is difficult to assess the final, exact impact of this crisis on any company. However, in our case, we start from a very solid foundation, provided by a robust backlog that ensures a high level of activity for several years. The pace of execution, in some cases, has slowed, as we are adapting to client needs and to the logistical and operating difficulties derived from the pandemic. Nevertheless, the good news are that we are currently working on every single project in the backlog, a sign of the soundness of the projects and financial strength of our clients, the major players in our industry. Regarding our current bidding pipeline, we are only facing time delays and not project cancellations. Furthermore, we expect a stronger resilience in refining, petrochemicals and natural gas projects, as well as in projects in the Middle East. We have a strong focus on those sectors and on this region. I feel fully confident on our capacity to face the difficulties, as managing complexity is in the DNA of our company. That confidence is also supported by a solid initial backlog and liquidity position, as well as by the efficiency measures that Técnicas Reunidas is implementing and that will bear fruit in the next quarters. Times will not be easy, but I am definitely sure that we will emerge from this major disruption as a stronger company.” 3 First Quarter Results January – March 2020 The main figures for the quarter are the following ones: HIGHLIGHTS Q1 2020 Q1 2019 Var. Year 2019 January - December € million € million % € million Backlog 10,915 10,034 9% 10,026 Net Revenues 1,181 915 29% 4,699 EBITDA (1) 35.4 19.9 78% 110.2 Margin 3.0% 2.2% 2.3% EBIT (1) 23.7 10.6 124% 68.2 Margin 2.0% 1.2% 1.5% Net Profit (2) 8.7 3.7 134% -10.0 Margin 0.7% 0.4% -0.2% Net Cash Position (1) 419 219 91% 371 (1) Figures classified as Alternative Performance Metrics ("APMs"). See appendix. (2) Profit for the year from continuining operations Técnicas Reunidas will hold a conference call today at 16:00 CET. It can be accessed through the link in its homepage http://www.tecnicasreunidas.es/en/ 4 First Quarter Results January – March 2020 2. BACKLOG Project Country Client ExxoMobil´ refinery Singapore ExxonMobil Sitra refinery Bahrain BAPCO Baku refinery Azerbaijan SOCAR Duqm refinery Oman DRPIC Ras Tanura refinery Saudi Arabia Saudi Aramco Al Zour refinery Kuwait KNPC Minatitlán refinery Mexico Pemex Talara refinery Peru Petroperu Jazan refinery* Saudi Arabia Saudi Aramco Refining and Petrochemical Polyethylene plant Canada Nova Chemicals Hassi Messaoud refinery Algeria Sonatrach Marjan Saudi Arabia Saudi Aramco Bu Hasa United Arab Emirates ADNOC Onshore Das Island United Arab Emirates ADNOC LNG Haradh Saudi Arabia Saudi Aramco Fadhili* Saudi Arabia Saudi Aramco Upstream & Gas GT5 Kuwait KNPC Jazan IGCC* Saudi Arabia Saudi Aramco Sewa United Arab Emirates Sumitomo / GE EFS Biomass plant UK MGT Teeside Turów Poland Polska Grupa Energetyczna Power Tierra Mojada* Mexico Fisterra Energy Kilpilahti* Finland Neste / Veolia / Borealis * Project in mechanical completion or carrying out services for the start up phase of the plant Backlog as of March 31st ,2020 At the end of March 2020, Técnicas Reunidas’ backlog amounted to € 10.9 billion, 9% higher compared to the € 10.0 billion reached at the end of December 2019. Oil and Gas projects comprised 95% of the total backlog, whereas the Power division accounted for 5%. Q1 2020 order intake was € 1.9 billion, the main awards added to the backlog in the first quarter was the Sonatrach project in Algeria. In January, Sonatrach, the Algerian National Oil Company, and Técnicas Reunidas signed a contract for the execution of project for a grassroots refinery, at Haoud el- Hamra, Hassi Messaoud, in Algeria. The project will be executed in a Joint Venture (JV) with Samsung Engineering Ltd. Co. Técnicas Reunidas will be the leader of the JV, with a 55% share. The contract has an approximate total value of US$ 3,700 million, with the share of TR exceeding US$ 2,000 million. The new refinery will have a processing capacity of five million tons/year. 5 First Quarter Results January – March 2020 The scope of the project includes the execution of a completely new refinery, including all the process and environmental units, as well as the necessary auxiliary services. The project includes some of the most advanced processing units, with technologies that are targeted to deep conversion, clean fuel production and fulfilment of stringent environmental requirements. The Hassi Messaoud project is one of the largest investments made in Algeria and is part of an ambitious program, with the objective of increasing the local production of energy products to meet with Algeria’s increasing demand, while adapting oil products internally consumed to European environmental standards (Euro V). The design and execution of the plant will aim to fulfil the most stringent safety and environmental standards. 6 First Quarter Results January – March 2020 3. CONSOLIDATED INCOME STATEMENT CONSOLIDATED INCOME STATEMENT Q1 2020 Q1 2019 Var. Year 2019 January - December € million € million % € million Net Revenues 1,180.7 914.5 29.1% 4,699.1 Other Revenues 0.6 1.5 7.8 Total Income 1,181.3 916.0 29.0% 4,706.9 Raw materials and consumables -926.3 -664.3 -3,679.5 Personnel Costs -161.1 -164.7 -610.8 Other operating costs -58.6 -67.0 -306.4 EBITDA 35.4 19.9 77.9% 110.2 Amortisation -11.7 -9.3 -42.1 EBIT 23.7 10.6 123.7% 68.2 Financial Income/ expense -11.3 -3.6 -12.6 Share in results obtained by associates 0.0 -1.3 0.3 Profit before tax 12.4 5.7 116.6% 55.8 Income taxes -3.7 -2.0 -65.8 Profit for the year from continuining operations 8.7 3.7 134.5% -10.0 Profit (loss) from discontinued operations 0.0 0.0 0.0 Profit for the year 8.7 3.7 134.5% -10.0 Non-controlling interests -1.6 0.2 -0.8 Profit Attibutable to owners of the parent 7.1 4.0 79.4% -9.2 3.1 REVENUES REVENUES BREAKDOWN Q1 2020 Q1 2019 Var. Year 2019 % January - December € million € million % € million Oil and gas 1,080.5 91.5% 829.1 30.3% 4,273.5 Power & Water 75.7 6.4% 63.1 20.0% 330.9 Other Industries 24.4 2.1% 22.3 9.3% 94.7 Net Revenues 1,180.7 100% 914.5 29.1% 4,699.1 In Q1 2020, net revenues were € 1,181 million, +29.1% higher than 1Q 2019 sales, despite the slowdown in execution in March due to the effects of Covid-19.
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